Voya 2014 Annual Report Download - page 57

as well as by interest rate and market conditions over time and by the availability and features of competing
products. If emerging experience deviates from our assumptions on either GMIB annuitization or GMWBL
withdrawal, we could experience gains or losses and a significant decrease or increase in reserves and capital
requirements.
The account values and NAR, both gross and net of reinsurance (“retained NAR”), of contract owners by
type of minimum guaranteed benefit for retail variable annuity contracts are summarized below as of
December 31, 2014:
($ in millions) As of December 31, 2014
Account Value(1)
Gross
NAR Retained NAR
% Contracts NAR
In-the-Money(2)
% NAR
In-the-Money(3)
GMDB ......................... $41,077 $5,574 $5,048 46% 24%
Living Benefit
GMIB ..................... $14,027 $2,361 $2,361 75% 19%
GMWBL ................... 15,804 1,324 1,324 47% 16%
GMAB/GMWB .............. 777 17 17 12% 19%
Living Benefit Total .............. $30,608 $3,702 $3,702 61%(4) 18%(5)
(1) Account value excludes $2.1 billion of Payout, Policy Loan and Life Insurance business which is included
in consolidated account values.
(2) Percentage of contracts that have a NAR greater than zero.
(3) For contracts with a NAR greater than zero, % NAR In-the-Money is defined as NAR/(NAR + Account
Value).
(4) Total Living Benefit % Contracts NAR In-the-Money as of December 31, 2013 was 44%. The period over
period change is primarily due to declining interest rates in 2014.
(5) Total Living Benefit % NAR In-the-Money as of December 31, 2013 was 14%. The period over period
change is primarily due to declining interest rates in 2014.
As of the date indicated above, compared to $3.7 billion of NAR, we held gross statutory reserves before
reinsurance of $3.1 billion for living benefit guarantees; of this amount, $3.0 billion was ceded to SLDI,
supported by assets in trust. However, NAR and statutory reserves are not directly comparable measures. Our
U.S. GAAP reserves for living benefit guarantees were $2.7 billion as of December 31, 2014.
For a discussion of our U.S. GAAP reserves calculation methodology, see the Business—Basis of
Presentation and Significant Accounting Policies—Future Policy Benefits and Contract Owner Account
Balances Note in our Consolidated Financial Statements in Part II, Item 8. in this Annual Report on Form 10-K.
Variable Annuity Hedge Program and Reinsurance
Variable Annuity Guarantee Hedge Program. We primarily mitigate CBVA market risk exposures through
hedging. Market risk arises primarily from the minimum guarantees within the CBVA products, whose economic
costs are primarily dependent on future equity market returns, interest rate levels, equity volatility levels and
policyholder behavior. The Variable Annuity Guarantee Hedge Program is used to mitigate our exposure to
equity market and interest rate changes and seeks to ensure that the required assets are available to satisfy future
death benefit and living benefit obligations. While the Variable Annuity Guarantee Hedge Program does not
explicitly hedge statutory or U.S. GAAP reserves, as markets move up or down, in aggregate the returns
generated by the Variable Annuity Guarantee Hedge Program will significantly offset the statutory and U.S.
GAAP reserve changes due to market movements.
34